Don’t Be Fooled By These 3 Overhyped Trends

by Greg Satell

The Gartner Hype Cycle shows a remarkably consistent pattern. A new technology is first ignored, then begins to show promise and expectations get inflated beyond any realistic assessment of value. That leads to disillusionment and the technology is almost forgotten until, some years later, it begins to make a true competitive impact.

What makes the Hype Cycle so pervasive is that it is, essentially, a pattern based on our obsession with patterns and stories, which is so universal that there is a whole branch of mathematics devoted to it. Our love of patterns is so great, in fact, that once we notice one we are often unable to disregard it.

The concept isn’t limited to the technologies Gartner follows. At any given time there are a variety of trends and business ideas getting hyped. That’s a problem because an enormous amount of time and energy is wasted when a trend is at maximum hype. Right now there are three major trends you need to watch out for if you don’t want to get caught in the cycle.

Some argue that this time is different, because now machines are replacing cognitive skills as well as physical labor. That is, of course, possible, but so far there’s no indication it’s actually happening. In fact, the US is beginning to experience a labor shortage which is especially severe in manufacturing, where you would expect technology to have its greatest effect.

2. The Platform Economy

Another recent obsession focuses on platform businesses. Firms like Uber and AirBnb have built billion dollar valuations in just a few short years. Business gurus practically swoon at how this new model dominates traditional “pipeline businesses” that are encumbered by old fashioned physical assets.

Look a little closer though and the picture is not nearly as rosy as it seems. Uber has blown through billions and still shows no signs of becoming profitable any time soon. It possibly never will. AirBnB represent less than 1% of the global hospitality industry. Clearly, there is far more money to be made in the other 99%. Hotel occupancy recently hit record highs, although room rate growth has slowed a bit.

Even Amazon is somewhat of a cautionary tale. It’s obviously a well-run company managed by one of the great management geniuses of our time. Still, until recently, it was a poor business earning sub-par margins. Lately, its profit picture has brightened considerably, but mostly due to its cloud computing unit, which looks far more like a pipeline business.

What’s truly important about platforms is that they allow us to access ecosystems of talent, technology and information far more efficiently than we ever could before. Some of that value will accrue to the firms that manage those platforms, but far more will go to everyone else.

Many are calling this a retail apocalypse, but look a little closer and it becomes clear that there is more to the story. Amazon has made a big push into physical retail, capped off by its $13.7 billion purchase of Whole Foods. Others, ranging from Bonobos to Warby Parker, also opened physical stores.

So clearly the problem isn’t with retail itself, but the inability for legacy firms to adapt to a new model. What’s really going on is that the function of a physical location has changed from driving transactions, which can happen anywhere these days, to doing all the things that can’t easily be done online, like build relationships, service and upsell.

In some cases, traditional retailers are actually benefiting from the store closings, because commercial landlords have learned to be far more flexible, which allows for more experimentation with new concepts like pop-up shops.

Forget About The Hype And Focus On The Shift

Take a look at these overhyped trends and it becomes clear that our perceptions of them are heavily influenced by availability bias. We see robots doing human tasks and not the new jobs that are being created. We see platform businesses like Uber and AirBnB explode overnight and never ask if they are making money. We see retailers close, but don’t notice what’s opening up.

The truth is that value rarely disappears, it just shifts to another place. Knowledge workers become relationship workers. Platforms lower costs for pipelines. Large retail locations with stockrooms give way to “shoppable showrooms” that combine “high touch” experiences with same-day delivery.

Today, everybody needs to learn the art of the shift. Disruption is nothing new, but today it happens much faster and the longer we cling to old models, the harder it is to solve new problems and the less likely we are to survive. On the other hand, once we make the shift, the possibilities are endless.

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Greg Satell is a popular author, speaker, and innovation adviser who has managed market-leading businesses and overseen the development of dozens of pathbreaking products. Follow Greg on Twitter @DigitalTonto. His first book, Mapping Innovation, was selected as one of the best business books of 2017 by 800-CEO-READ.